Get on the Path to a Good Financial Future
Most of us like to wait until a milestone or important date, such as our birthday or New Year’s Day, to plan our finances, but any day is a great time to start.
It’s good to remember to take budgeting and saving seriously so you can build financial stability and prepare for the future. Developing and instilling good financial practices will solidify your current financial status and serve you through retirement.
Making small changes to our daily habits can reap great financial benefits. Structuring your finances can be quite straightforward once you’ve distinguished your wants from your needs and have taken inventory of your current spending. Ahead we have outlined 4 great ways to get your financial future on the path to success.
Create a Financial Plan and Budget
Creating a financial plan requires building a long-term strategy to get you where you want to go - 5, 10, or 20 years down the road. While making a budget helps you map out your essential expenses to manage your money for the day-to-day on a weekly or monthly basis and plan for the weeks and months to come.
Your financial plan may include things like buying a home, making upgrades to your home, planning for retirement, education, and other large purchases. Having a grasp on how much to budget once your expenses are paid lets you know how much money can be put toward the goals in your financial plan. The closer you stick to your budget, the more progress you'll make.
Review Your Credit Score and Reports
Your credit report is a summary of your personal credit history and is used to decide whether to loan you money, give you credit, offer you insurance, or rent you a home. It's a good idea to check that your information is accurate, complete, and up to date at least once a year, especially before you apply for credit, a loan, insurance, or a job. If you find mistakes on your credit report, contact the credit bureaus and the business that supplied the information to remove the errors from your report. They could also be a sign of identity theft.
By law, you can get a free copy of your credit report every 12 months, but a policy enacted in the early days of the pandemic allows everyone in the U.S. to get a free credit report each week from all three national credit bureaus (Equifax, Experian, and TransUnion) at AnnualCreditReport.com through the end of 2023. So be sure to get yours and check it often.
Create an Emergency Fund
An emergency fund is an account set aside to help pay for significant, unexpected expenses, such as medical expenses, appliance repairs or replacements, major auto repairs, unemployment, and more. It creates a financial buffer that can help to keep you afloat in a time of need without having to rely on credit cards or take out a loan.
The right amount depends on your financial circumstances, but a good rule of thumb is to have enough to cover three to six months’ living expenses. If you lose your job, you could use the money to pay for necessities while finding a new one. Starting small can add up over time. Try to set aside at least $500 to start but work your way up to half a year’s worth of expenses.
Learn more on how to build your emergency fund in our blog post Emergency Fund: What It Is and Why It Matters.
Build Your Savings
We now know it’s a great idea to have an emergency fund for unexpected expenses, but what about saving for more fun things? Having multiple savings accounts can help with your budget and help you save for when you want to make a large purchase, put a down payment on a car or home, or go on a fun vacation.
Setting up a direct deposit into your account is one easy way to automate saving. Or you can set up transfers from one of your GFA accounts to another using online or mobile banking. This way you can divide up your money into categories such as everyday expenses, emergency fund, and savings.
GFA offers many savings accounts for all types of situations and people. Our Smart Choice Savings account is one example that will help you earn more interest with a lower account balance to help jump start your savings!